Royal Mail pension fund will collapse if MPs block privatisation

More than 450,000 current and former Royal Mail staff have been warned that their pensions may be halved if plans to privatise parts of the business do not go ahead.

A letter to business secretary Peter Mandelson from the chair of the scheme’s trustees warned that the organisation’s pension fund deficit had surpassed the £5.9bn predicted in the Hooper Review, and that there would be “devastating consequences” should the sale of up to 30% of the business not go through.

Nearly 140 Labour MPs say they are opposed to the sale, which will be unveiled in a bill to Parliament on Thursday.

Billy Hayes, CWU general secretary, warned that the release of the letter was just a distraction, and said privatisation would not protect pension benefits.

“We don’t need lectures from the House of Lords on how to run Royal Mail,” said Hayes. “Privatisation is not linked in any way to sorting out the pension fund. It’s about making the company viable for take-over.”

There are 452,000 members of the pension plan, with 161,000 still working and 291,000 retired or on deferred pensions – the overwhelming majority are on final salary schemes.